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Overview: Profit & Loss Video Lecture | General Test Preparation for CUET

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FAQs on Overview: Profit & Loss Video Lecture - General Test Preparation for CUET

1. What is a profit and loss statement?
Ans. A profit and loss (P&L) statement, also known as an income statement, is a financial statement that summarizes the sales, expenses, and profits of a business over a specific period of time, usually a month, quarter, or year.
2. How is profit calculated on a P&L statement?
Ans. Profit on a P&L statement is calculated by subtracting the total expenses from the total revenue. The formula is: Profit = Revenue - Expenses.
3. What information can be obtained from a P&L statement?
Ans. A P&L statement provides a clear picture of a company's financial performance over a specific period by breaking down the revenue and expenses into various categories. It shows the total revenue earned, the cost of goods sold, gross profit, operating expenses, net profit, and other income or expenses.
4. Why is a P&L statement important for a business?
Ans. A P&L statement is important for a business because it helps to track the financial performance of the company over a specific period. It helps to identify the areas where the company is making a profit and where it is losing money. This information can be used to make informed decisions that lead to increased profitability and sustainability.
5. How often should a business prepare a P&L statement?
Ans. A business should prepare a P&L statement at least once a year to track its financial performance. However, it is advisable to prepare it on a monthly or quarterly basis to get a more accurate picture of the company's financial health and to make timely decisions to improve profitability.
159 videos|339 docs|384 tests
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